This study explores the cycling of phosphorus (P) in the euphotic zone following upwelling in northeastern Monterey Bay (the Red Tide Incubator region) of coastal California, with particular emphasis on how bacteria and phytoplankton that form harmful algal blooms mediate and respond to changes in P availability. In situ measurements of nutrient concentrations, phytoplankton community composition, and cell-specific alkaline phosphatase (AP) activity (determined via enzyme-labeled fluorescence assay) were measured during three cruises. Upwelling led to a 10-fold increase in dissolved inorganic (DIP) in surface waters, reaching ∼0.5 μmol L−1. This DIP was drawn down rapidly as upwelling relaxed over a period of 1 week. Ratios of nitrate to DIP drawdown (∼5:1, calculated as the change in nitrate divided by the change in DIP) were lower than the Redfield ratio of 16:1, suggesting that luxury P uptake was occurring as phytoplankton bloomed. Dissolved organic (DOP) remained relatively constant (∼0.3 μmol L−1) before and immediately following upwelling, but doubled as upwelling relaxed, likely due to phytoplankton excretion and release during grazing. This transition from a relatively high DIP:DOP ratio to lower DIP:DOP ratio was accompanied by a decline in the abundance of diatoms, which had low AP activity, toward localized, spatially heterogeneous blooms of dinoflagellates in the genera Prorocentrum, Ceratium, Dinophysis, Alexandrium, and Scrippsiella that showed high AP activity regardless of ambient DIP levels. A nutrient addition incubation experiment showed that phytoplankton growth was primarily limited by nitrate, followed by DIP and DOP, suggesting that P regulates phytoplankton physiology and competition, but is not a limiting nutrient in this region. AP activity was observed in bacteria associated with lysed cell debris and aggregates of particulate organic material, where it may serve to facilitate P regeneration, as well as affixed to the surfaces of intact phytoplankton cells, possibly indicative of close, beneficial phytoplankton–bacteria interactions.